Last Updated:November 24, 2024, 17:23 IST

Maharashtra Elections and the Stock Market: Experts say though weak earnings, a strong dollar, FPI outflows, and geopolitical events still remain a concern; the share market is now expected to get a boost on the back of a strong government in India’s biggest financial hub.

The Maharashtra election result is expected to provide political stability, positively impacting the investor sentiment, especially in infrastructure, urban development and manufacturing, says an analyst.

Maharashtra Election s and the BSE Sensex-NSE Nifty Outlook: Even as the Maharashtra Assembly election 2024 has fetched a resounding victory to the BJP-led Mahayuti Alliance in the state, all eyes are now on the Indian stock market, which has been facing bearish sentiments for over two months. Experts say the share market is now expected to get a boost on the back of a strong government in India’s biggest financial hub. They, however, said weak earnings, a strong dollar, FPI outflows, and geopolitical events still remain a concern.

“On Monday, the market is likely to witness a strong opening, with indices being projected to rise by 1 per cent-1.5 per cent,” Deepak Jasani, head of retail research at HDFC Securities said, adding that the markets are already in a recovery phase, and this victory will further boost sentiment.

The BJP-led Mahayuti, which also comprises the Shiv Sena of Chief Minister Eknath Shinde and NCP of deputy CM Ajit Pawar, on Saturday retained power in the state by bagging 230 of the 288 assembly seats. The BJP bagged 132 seats, the Shiv Sena won 57, while the NCP got 41 seats. In the MVA, the Nationalist Congress Party (Sharadchandra Pawar) candidates won 10 seats, Congress won 16, while Shiv Sena (Uddhav Balasaheb Thackeray) won 20 seats.

Jasani said that the NSE Nifty could target the 24,400-24,500 levels within the first couple of trading sessions this week.

“The Maharashtra result is expected to provide political stability, positively impacting the investor sentiment, especially in infrastructure, urban development, and the manufacturing sectors aligned with BJP policies,” Palka Arora Chopra, director of Master Capital Services Ltd, said.

Chopra added that the stability In Maharashtra could trigger a rally in the stock market, boosting investor confidence due to the continuity of pro-business policies, especially after uncertainty following previous coalition shifts. Furthermore, with a clear mandate, the government is likely to push forward with infrastructure projects, a key focus of the BJP, which would benefit the construction, real estate, and related sectors.

On Friday, November 22, the stock market saw a sharp surge amid short covering in the F&O segment following major exit polls that indicated a big victory for the BJP-led alliance. Though most exit polls were released at the end of the voting day on November 20, the most crucial ones like AxisMyIndia and Chanakya (which the markets follow closely) were released a day later on November 21 after market hours.

On Friday, November 22, the NSE Nifty surged by 2.39 per cent to close at 23,907.35, the BSE Sensex jumped by 2.54 per cent to 79,117.11.

Market Outlook: The Technical Analysis

“The Nifty 50 ended the week with a positive candle on the weekly chart, rebounding after eight weeks of selling. The recovery came from the 200-day EMA, closing above 24,900,” Chopra said.

On the outlook, Chopra said strong resistance is seen at 24,100, a key level to watch. If buying momentum pushes the index above this, it could advance toward 24,500. On the downside, 23,700 acts as critical support, and a breach below this may drag the index to 23,400.

“Until Nifty sustains above 24,500, the prevailing bearish trend suggests a ‘sell on rise’ strategy for traders, focusing on resistance and support zones for positioning,” she said.

Santosh Meena, head of research, Swastika Investmart Ltd, said, “The Nifty found strong support at 23,200, which aligns with the 61.8 per cent retracement of its previous rally from the election-day low of 21,281 to the high of 26,277. The index reclaimed its 200-DMA with a bullish harami candlestick formation, signalling a potential trend reversal.”

Immediate resistance is at the 20-DMA of 24,030, and a breakout above this level could push Nifty toward 24,550/25000 levels. On the downside, 23,500, near the 200-DMA, remains a critical support level. Similarly, Bank Nifty has held firm at its 200-DMA, with immediate resistance at 51,300–52,000 and a higher resistance zone at 52,600–53,300, she said.

“Historically, downtrends often culminate in panic days, and the Adani-triggered sell-off appears to have marked such a turning point. With markets oversold for nearly two series, a short-covering rally has emerged ahead of the November expiry,” Meena added,

Risks: ‘Geopolitics, Rupee Decline, Earnings Remain Concerns’

“On the domestic front, Maharashtra elections where NDA witnessed one-sided victory are likely to boost bullish sentiment further. However, global factors continue to pose significant risks. Escalating tensions between Russia and Ukraine, alongside rising crude oil prices, have added to inflationary concerns,” Swastika Investmart’s Meena said.

Simultaneously, a strengthening dollar index and elevated US bond yields are weighing on the rupee, leading to record foreign portfolio investor (FPI) outflows of Rs 1.55 lakh crore in October and November combined.

“The direction of FPI flows will remain a key determinant for the markets following the recent correction,” Meena added.

Additionally, interest in Chinese markets is fading, making Indian valuations more appealing post-correction. Global triggers, including US economic data such as PCE inflation, GDP growth rates, and FOMC meeting minutes, will play a critical role in shaping investor sentiment. Commodities and geopolitical developments will also remain vital factors influencing global market trends.